TOPIC 18 - Regulating firms and individuals Flashcards
The Senior Managers Regime includes four specific conduct rules for those covered by the regime. Which one of those rules is incorrectly stated below?
a) SM1: take reasonable steps to ensure that the business of the firm is controlled effectively.
b) SM2: take reasonable steps to ensure that the business of the firm for which you are responsible complies with the relevant requirements and standards of the regulatory system.
c) SM3: take reasonable steps to ensure that any delegation of your responsibilities is to an appropriate person and that you oversee the discharge of the delegated responsibilities effectively.
d) SM4: disclose appropriately any information of which the FCA or PRA would reasonably expect notice.
a) SM1: take reasonable steps to ensure that the business of the firm is controlled effectively.
SM1 should read: you must take reasonable steps to ensure that the business of the firm for which you are responsible is controlled effectively.
Which of the following is not an FCA-regulated activity?
a) Foreign currency exchange.
b) Mortgage administration.
c) Debt collecting.
d) Accepting deposits.
a) Foreign currency exchange.
Jeremy’s firm is assessing his fitness and propriety and is considering his complaints record. Which element of the test would this be considering?
a) Capability.
b) Financial soundness.
c) Honesty, integrity and reputation.
d) Competence.
c) Honesty, integrity and reputation.
FCA rules require a firm to seek references from previous employers before an individual can be appointed to a senior manager or certification function. The references must cover what period?
a) The last 3 years.
b) The last 5 years.
c) The last 6 years.
d) The last 10 years.
c) The last 6 years.
Compliant Finance is a small firm of advisers that have been categorised as a flexible portfolio firm for supervision purposes. This means that the firm:
a) only deals with retail customers.
b) is able to add new regulated activities without seeking permission.
c) is supervised through the FCA customer contact centre.
d) is supervised by a named individual.
c) is supervised through the FCA customer contact centre.
Which of the following is not an FCA enforcement power?
a) Withdrawal of a permitted activity.
b) Redress.
c) Seek an injunction.
d) Prosecution.
d) Prosecution.
Which of these roles would not be subject to the FCA Tier 1 conduct rules?
a) Mortgage adviser.
b) Claims manager.
c) New business assistant.
d) IT technician.
d) IT technician.
Misha started a role as a trainee investment adviser with a firm of independent financial advisers in 2020, but left after 9 months to move into retail management. She started a trainee investment adviser role with another firm in January 2022. By when must Misha pass an appropriate qualification?
a) March 2024.
b) December 2025.
c) March 2026.
d) December 2026.
c) March 2026.
Misha’s previous time in the role counts as part of the 48-month deadline.
Geoff is a financial adviser, specialising in non-MiFID investments. For how long must Geoff’s firm keep records of his training and competence after he leaves the firm?
a) As long as the firms deems to be appropriate.
b) At least three years.
c) At least five years.
d) Indefinitely.
b) At least three years.
A firm has taken disciplinary action against a senior manager for a breach of FCA conduct rules. Within what period must the firm report the breach to the FCA?
a) 7 days.
b) 10 days.
c) 14 days.
d) 28 days.
a) 7 days.
What is Part 4A permission?
Permission under Part 4A of the Financial Services and Markets Act 2000 to carry out specified regulated activities.
One of the reasons why direct investment in shares is considered higher risk is because it is not classified as a regulated investment. True or false?
False. Investment in shares is a regulated investment.
When assessing whether a person is fit and proper to perform a senior management function, the FCA requires that particular attention be given to certain factors. Which of the following is not a factor that the FCA requires to be considered?
a) Whether the person has obtained a relevant qualification.
b) Whether the person has undergone or is undergoing training.
c) Whether the person possesses a relevant degree of competence.
d) Whether the person has worked in the financial services industry for at least five years.
d) Whether the person has worked in the financial services industry for at least five years.
Which one of the following job applicants is least likely to meet the FCA ‘fit and proper’ requirements?
a) George, who has recently been made redundant from a firm of independent financial advisers.
b) Irene, who currently has an authorised overdraft limit of £2,000.
c) Francois, whose father’s house was taken into possession by the lender three years ago.
d) Yvette, who has missed her last two mortgage payments following a divorce.
d) Yvette, who has missed her last two mortgage payments following a divorce.
What was the main reason behind the introduction of the Senior Managers and Certification Regime in 2016?
The regime was introduced in order to clarify responsibilities within a firm, thus making it easier to hold individuals to account for a particular failing. Prior to its introduction, the FCA and PRA had found it difficult to determine individual responsibility when seeking to take action against firms in the financial services industry
